>> the standoff over the debt ceiling turnings toxic. was the president jilted or did he ask for too much and is there a way forward anymore? late-breaking news tonight on washington week. >> as the saying goes, indecision becomes decision with time. >> harry reid keeps saying that somehow the house won't work with him. where are his ideas? >> are lawmakers inching closer to agreement in the debt ceiling debate? >> i would suggest that it is going to be a hot weekend here in washington, d.c. >> or are they farther apart than ever? >> i just got a call about a half hour ago from speaker boehner, who indicated that he was going to be walking away from the negotiations that we have been engaged in here at the white house. >> the dispute reverberates

in the states, among voters and all along the 2012 campaign trail. >> the president is fond of saying that he didn't cause the recession, that he inherited the recession and that's true, but he made it worse. >> so what happens next? covering the week, jackie with the wall street times and dan with "the washington post" and john harwood cnbc and "the new york times". >> award winning analysis covering history as it happens, live from our nation's capitol, this is washington week, produced in association with national journal, corporate funding for washington week is provided by -- >> this rock has never stood still. since 1875 we have been there for our clients

through good times and bad. when their needs changed, we were there to meet them. through the years from insurance to investment management to real estate to he retirement solutions shall we developed new ideas for the financial challenges ahead. this rock has never stood still. that's one thing that will never change. prudential. >> corporate funding is also provided by boeing. at&t. rethink possible. additional funding for washington week is provided by the annenberg foundation, the corporation for public broadcasting and by contributions to your pbs station from viewers like you. thank you. >> once again, live from washington. >> good evening. well, that head banging you may be hearing is the sound of frustration here in washington as the august 2 debt ceiling deadline he grows ever closer.

negotiations collapsed again tonight, yet the latest twist in the series of talks where each party has had its turn walking away from the table. the president came into the white house briefing room late today to offer his version of events. >> up until sometime early today when i couldn't get a phone call returned, my expectation was that speaker boehner was going to be willing to go to his caucus and ask them to do the tough thing but the right thing. i think it has proven difficult for speaker boehner to do that. i have been left at the altar now a couple of times and i think that, you know, one of the questions that the republican party is going to have to ask itself is can they say yes to anything? >> speaker boehner then came before the cameras and said the rules had changed. >> let me just say that the white house moved the goal

post. there was an agreement on some additional revenues. until yesterday, when the president demanded $400 billion more, which was going to be nothing more than a tax increase on the american people. >> so it's been like this all week. first there was a mcconnell solution, and then the reid solution and then the revival of the formerly paralyzed deal with the gang of six. >> reports were like a zombie movie. we have been dead many times over the last few months. >> now, house republicans wanted something else entirely. a new version of the balanced budget amendment they call cut, cap and balance. that died in the senate. the president sadie vied the government does -- the president said divided government does not have to mean no government. jackie, what happened? >> well, it's like you said,

and the president said as well, that for the second time, these talks have broken down. they're very private, secret talks initially between the president and mr. boehner, the house speaker, but the minute or soon after the word leaked that these talks were going on and just what was on the table, each party, mr. boehner and mr. obama, were getting flak from their parties and yesterday we were sort of focused on the congressional democrats blowback to mr. obama because of concessions he was reportedly making on the entitlement programs, medicare, medicaid and social security, but today was speaker boehner's walkout from the talks. it's clear that he has gotten plenty of blowback from his side yet again like earlier in the month when he left the talks. his side is just not willing to raise revenues as part of the deal. >> now, you vote wrote

yesterday that theres was a deal that was close and then everyone denied it. it seems to have fallen apart by tonight. were they ever close? the president says no and boehner says no. >> well, you know, the truism here, you heard it yourself, nothing is agreed to until everything is agreed to. it was always clear that both men were going to have to take this deal out and sell it. the thing is both men and speaker boehner know that this is something that there has to be an increase in the debt limit. we're talking here about this deficit reduction agreement over a ten-year period in the trillions of dollars but, you know, at bottom, what needs to be done is to increase the debt limit by august 2 or the country flirts with default and the economic quake that that will set in motion, so this is part of what would provide, you know, political cover and substance cover for doing that, but it is getting in the way of

getting what needs to be done done. it is an opportunity to get the deficit reduction, but if they can't agree to that, they also cannot not increase the debt limit. there is brinksmanship all the time. we talked earlier this year about the government shutdown. it is one thing to shut down the government. it is another thing to provoke a government default. this is so much worse shall the ramifications are so much potentially worse that there has to be some resolve. >> the president said today when he came out in the briefing room, i want everybody here tomorrow at 11:00 and we're going to talk again, which john boehner said he would be there, but john boehner also said that he was going to start his own negotiations with his counterparts in the senate. how does that work? >> welsh that's a good question and it's one of the complexities of what is happening now. mr. boehner made a point of saying he was leaving the talks and he was done with it and the only way to get it done was in quieter talks with both parties. the president upstaged him

by summoningth party leaders to the white house. one of the factors is mr. boehner may feel it is more difficult for him to sell a deal to his own members when they have been reached in the context of white house talks led by the president whereas he wants them achieved in more private discussions with the democrats and it would be easier. what will happen is probably both things will take place, you will have boehner and the other congressional leaders at the white house at 11:00 and have more private talks going on among staff and all the members. it remains which talks will progress the fastest. >> let's unpack this a little bit. we have seen these things fall apart but usually not so spectacularly. if they were talking, which is the conventional wisdom at least earlier this week, was at least that the president and speaker were talking. what stopped it? what derailed it? certainly it is not because john baner is scared of his caucus. >> well, that is part of the equation. it is not just the president.

look, jackie's point was exactly the right one. the president and the speaker can make a deal. in fact, it would be easy for them to make a deal. they both want a deal. they want a deal of similar size. they want to avoid a default. the question is how do you get 218 votes in the house and 06 votes in the senate? what that means is you have to get a large chunk of republicans in the house, some democrats, a large chunk of democrats in the senate and some republicans. it is not easy to do. i was on the phone last night at 1:00 in the morning with a republican member of congress, veteran, conservative, somebody who has served for a while who wants to see a deal get done, and we were talking about the back and forth that jackie mentioned yesterday when she said democrats were objecting to the terms they understood the president to be negotiating with speaker boehner, and he said, yeah, john boehner could put forward a plan in the house of representatives that has $3 trillion in spending cuts and a trillion in revenues and then he wouldn't be

speaker anymore. that was the wall he was up against in terms of resistance of his members to raise taxes. remember, he said our guys do not think we were sent here to raise taxes and they are not going to do it. >> were the democrats just as miffed with the president because yesterday when there were talks comes, the democrats said this was not a deal that was possible. >> from the democrats, from whatever they were able to see inside the negotiation, was that this deal was heavily weighted in terms of spending cuts with almost no revenue it, and so they they are with responding to reports about what seemed to be part of the agreement, and they were very upset, and i think for the first time it reminded people that the president could have some serious problems, but i think all along, people have assumed that the president would in the end be able to get democrats behind whatever agreement he was able to negotiate with the speaker as opposed to the question of whether the speaker would ever be able to get house republicans to

go along with the deal he negotiated with the president. >> in part, jackie, and i will start with you on this, the president said he would be willing to sign a short-term deal if that's what it takes, which i don't know what else there is for him to do at this point but his idea of a short-term deal is something that will take us through the election. that doesn't sound like the kind of short-term deal we have been hearing from congressional negotiators. >> actually, at this stage, any debt limit deal that would take us through the 2012 elections would be a huge win at this point. it's hard to see that happening, but what's really, you know, speaker boehner said he was going to go back to the hill, capitol hill and negotiate with senators on some deal, but it's hard to imagine what is that alternative now. it's not like for lack of trying that he was talking to the president. we saw just today as a matter of fact the defeat in the senate of the house republicans favored

alternative, cut cap and pass, and no one thought that would pass the senate and certainly president obama wouldn't sign it into law. the thinking was let the house republicans have their vote on this really, really far reaching package that would shrink government to levels not seen since, you know, after world war ii, and then they would get it out of their system, and their leaders would be able to compromise. well, it went down to defeat in the senate but what also happened was that senate majority leader reid and senate minority leader mcconnell also effectively shelved their own alternative to get a staged debt increase in the debt limit, so with those two alternatives just today going down in effect, you know, i don't know what alternative speaker boehner has in mind. >> what you saw in the president's press conference tonight was an attempt to set the terms for this fallback end-stage option.

the house republicans want to do a short-term deal, a couple hundred billion dollars in increase in the debt limit in exchange for cuts. the president wants it through the election. he was hammering them at his press conference tonight and saying i have proven i will compromise. they will not. >> they won't take yes for an answer. >> they won't take yes for an answer. the polls show independent voters increasingly are agreeing with the president on that. he is trying to maximize the pressure on them for cutting a longer-term deal through the election. >> have been following this closely. is there is a pat that i fail -- a path that i fail to see towards a compromise anymore? >> there is pretty much no path at this point. somebody has to give on something. the president says he insists on a deem that takes us through the election, not a $2.4 trillion increase. boehner says he needs $2.4 trillion in spending cuts.

how that'sing going to happen without revenue that has not already been ruled out, and it turns out that they have tried obvious and less obvious pathways, so something has to give. the obvious would be a shorter term deal and maybe if the president is presented with that or having the government default, he would have to accept it. >> dan, how delicate of a process has this been? we have seen our share of these kinds of negotiations and i think there is a certain -- even in the markets they seem to think i'll figure it out in the end but we don't see a way that they figure it out. is this more high stabs than we thought? >> it -- high stakes than we thought? >> it certainly has been. we are now in a very dire situation, i think, because there is no obvious way forward. these folks have been negotiating for many, many, many days, weeks. they have tried a lot of different options and now they're back to starting

over again on this, so that's a huge problem. i think it is a function of the fact that we are in this era of polarized government in which whoever wins the last election believes they have a mandate to do with what they said they were going to do in the election, even if they don't control the whole government, and so a divided government does require compromise, particularly at a moment like this, and it's not clear which side is prepared to make the real concession and get it done. >> dan, you have been talking to the governors and john, you have been out in iowa and talking to people who live outside of washington and they're watching with consternation. do they think everyone has lost their minds or does this even penetrate? does it trickle down in any way to people? >> well, different reaction, depending on the audiences. we had an nbc wall street journal poll this week and it showed that three-quarter ez of democrats say their leaders in congress should compromise with the republicans. three-quarters of

independents said democrats should compromise. different story on the republican side. you had a large majority, almost 70% of independents saying repeg cans, you need to compromise. most rank and file members said don't compromise, and that's what is reflected in the house caucus. independent voters matter next november but we have primary elections in the meantime including for president. i was in iowa this week with tim pawlenty and was talking to his aides about it as he makes his bus tour across iowa. one of his aides said to me, you think that he is hearing from republican voters that we ought to raise the debt limit? absolutely not. that's why you heard michelle bachmann saying i will not vote to raise the debt limit, absolutely and all of these pressures that dan mentioned from the bases of the two parties make it more difficult to get a deal. >> the governors are making painful choices which in some cases go against what they ran on in order to balance their budget and they watch this and think

what? >> well, they think washington has to get its act together, for two reasons. one, i had a very interesting interview with the governor of washington, the outgoing head of the national governors association, and she just went through a very difficult period to balance her budget and she said i made rotten decisions. i have been through a period in which i had to make rotten decisions. i said what do you mean by that? she said i'm undoing basically what i tried to do in my earlier years in office and i have done things that i know will hurt people but we simply had to do it. what governors are worried about is two things, one is that whatever cuts government makes will trick ral down to the states and they will have to make more cuts and they are worried that the uncertainty right now and the potential for the default will seal a terrible blow to their state economies, which, as they say, are in a very fragile state right now, and as they talk to businesspeople in their states where there is a rem r. republican or

democratic governors they are hearing the same thing. they want something done in washington that gets us through this period safely. >> it is possible that republican governors could become a source of pressure on the congress to make a deal with the president? >> well, it may be more than they are prepared to do. the governor of virginia, who when i talked to him a week ago, was basically taking a very hard-line. >> he has has a surplus. >> yes, but he said we did it without raising taxes and he said washington ought to try to do the same. this week he sent a letter to the white house basically saying, get a deal done. now, he says he still thinks it ought to be done with mostly spending cuts but he also said he has been warned that the state's bond rating cog go down if the federal debt limit isn't extended and so he's got a very deep personal interest. he's basically saying look, however i -- i'm not going to tell you how to do it, just do it. >> we heard john boehner

just yesterday talk about the credit rating for the federal government and worry ing that -- all agree a deal has to be done but the atmosphere is as toxic as it has ever been. >> i have never seen anything like t people who have been around congress for a long time say there has never been anything like it. there is always partisanship, but the level of rhetoric, the inflammatory way people are talking and the fact that people don't seem willing to give or compromise at all is striking. particularly as we're approaching that everyone agrees is an economic precipice to still have no movement at this stage of the game is really amazing. i think all of us thought by now we would no longer be talking about this. they would having figured it out. >> we hoped. >> i certainly thought it would be over by now. there was something about the last election that was different from previous elections which is a lot of republicans were elected not only based on what they saw it, but as they saw it as a specific narrative that the problem with the republican

party had been that they compromised too much. it is not that they were elected on small government platforms but also with the idea that compromise was inherently week and and a weak anchor rupting thing to do. that's why we're here. let me address it from the white house and pennsylvania avenue because the president is coming out today abandoning efforts to the cool, collected obama. he decided to let us see he was a little mad, ticked off, prefers to have his phone calls returned when he calls the speaker. was that very much on purpose? did the white house decide it's time to take off the gloves and show our, not just exasperation but anger at the process? >> i think it was both. i think, you know, part of it was stagecraft, but part of it was real. we have reached a point where if the ramifications of this weren't so bad in default, if the stakes weren't so huge, the white house might actually be getting to the point where

they would be enjoying this. the polls are showing that more americans have started to pay attention to this issue. you have fewer people saying that default doesn't worry them, and certainly if it happens they will find out that they should have been worried are. i think he is in a good position. i mean, he is in the middle. politically speaking he's in a good position. there's no question, when we lay out what we already know, and we're going to learn more, he has compromised far more than democrats ever won. you should see the e-mails i get from democrats who are so angry with him, but there is still, for all that remains, little question that he could have brought his party along to a, quote, unquote, balanced deal, and the republicans have not shown similar give, and it's just that those are just the facts right now and it goes to what he said about the

election we had. i was here in the gingrich are revolution in the '90's. there was compromise in the '80's. there wasn't ideological rigidity. in the '90's, it got more so but there were ultimately more compromises. this is a new group and like he said, they just don't see the political or substantive value in compromising on a question so fundamental to them as taxes. >> jackie, he was talking about the fiery rhetoric and there was some suggestion from both sides today, especially from speaker boehner that there had been a double-cross, that the goal posts had been moved and that sort of thing. i have to tell you from my perspective, it looks to me like a straight-up ideological disagreement over the size and role of government over how much government we can afford and should afford and it wasn't really about personal goodwill t seemed to me that the leaders were trying to work it out and found they just couldn't get the votes.

do you agree with that or do you see a double-cross by either side? >> no, i actually think, you know, it pained john boehner greatly to walk away from the table and it pains president obama to walk out to the white house briefing room to have to say the things he did tonight but that's what makes it so hard to see the way out of this, and you know, the only way i can see out of this is there is no question ultimately you have to increase the debt limit, so in return, do you get, you know, just president obama has already admitted another concession that he would be willing to take a smaller deficit reduction package, only spending cuts, in return for a shorter debt limit increase. >> well, let me ask everybody around the table as we shockingly run out of time, to talk about what our next deadlines are. the president said today before the stock markets opens monday we have to do something. we know what the august 2 deadline s we have seen them

walk up to the lip of this before and back away. what is the realistic deadline? >> i think they are running out of time. they have to have something by the end of the weekend. everyone is afraid when the markets open monday they mr. plummet. they will need a framework. there will are also legislative deadlines because there are vern things they have to do. they can't just past a bill the second they think of it. for both of those reasons they need something by sunday night. >> i have been told by people at the white house if this deal was come together it would likely have come together monday which would give the speaker enough time -- >> this coming monday. a this coming monday to get it on the floor wednesday without letting people fly speck it. because of what happened tonight, i think the deadline may be earlier in order to show progress. >> thank you all very much. it is breaking news tonight and it ising interesting to see with what it all meant. jackie, thank you for taking a break from filing your

story in the newsroom. we have to end the conversation here but it continues on-line where we will talk about other things including the don't ask don't tell policy and the murdoch scandal. you can find it at pbs.org. keep up with daily developments including fallout from the attacks in norway. we will meet you again right here next week on washington week. good night. >> funding for washington week is provided by -- >> we know why we're here. to connect our forces to what they need when they need it.

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